Reasons for why to choose to Open an NRI Bank Account

Relocating to a foreign country requires a lot of paperwork to manage your hard-earned money as well as other financial investments. Whether it is transferring your overseas income to family members living in India or keeping track of funds originated in the country through rent or dividends, an NRI account is your one-stop solution to manage the funds while putting the worries at ease. 

Remotely accessible from your residing country, an NRI account can be easily opened online without visiting any bank branch in India in person. 

A person living overseas can choose from three types of NRI accounts — NRE (Non-Resident External), NRO (Non-Resident Ordinary), and FCNR (Foreign Currency Non-Resident) account — based on their specific financial needs. Along with repatriation and tax benefits, an NRI account also offers a host of additional services, such as exploring investment and asset-building prospects.

Read on to know about the reasons for opening an NRI bank account in India.

• Repatriation

The smooth flow of funds within and outside the country is termed repatriation. The deposits, both principal amount and interest earned, of an NRE and FCNR account can be easily transferred to NRIs’ present resident country without any tax liability. However, in an NRO account, there are certain restrictions as the source of income is in India through various avenues, including rents, pensions, etc. While the interest amount is freely repatriable, there is a cap on the principal amount of up to $1 million in a financial year, as per RBI guidelines. 

• Tax Exemption

Another reason to open an NRI account is obtaining maximum tax benefits. In an NRE account, both the principal amount and the interest earned through savings, FDs, recurring deposits, or any other investments is entirely tax-free in India. On the other hand, the savings and fixed deposits of an NRO account are subjected to tax deduction at source (TDS). To avail of reduced tax benefits related to it, you are free to apply as per DTAA guidelines.

• Investments

While the banks offer a substantial interest rate on the NRI savings account and FDs to grow money, they also provide a chance to invest in the stock market and other financial instruments to NRIs with a Demat account. The shares bought and sold through an NRE account can be fully repatriated overseas.

• Convenient to manage 

An NRI account can be opened hassle-free from your residing country through online documentation and KYC verification. Upon successful creation, the account holder can easily access bank services such as transferring funds, checking account history, etc., from across the globe. The bank also provides the option of jointly holding an NRI account with an NRI and nominating a resident Indian through a power of attorney (mandate holder) mode for ease of account operation.

• Additional benefits

While the money can be deposited in an NRI account in any foreign currency, the withdrawal can only be made in Indian rupees as both the NRE and NRO accounts are INR denominated. Additionally, it requires a minimum nominal balance to function. An NRI account can be easily converted to a regular savings account when you return to India permanently without any hassle.